The United States is considering financial support for a $12 billion dam in Pakistan in an attempt to improve its battered image in the country.

The United States is considering financial support for a $12 billion dam in Pakistan in an attempt to improve its battered image in the country.

The Daimer Bhasha dam would provide enough electricity to end Pakistan's crippling shortages. It is said its reservoir would hold so much water it could have averted last year's devastating floods.

Washington has not yet made a final decision, but the U.S. money would be crucial in securing other international finance, especially from the Asian Development Bank. "Getting involved in a long-term project like this is very compelling for us," said a senior US official.

"This is the project we're spending our time assessing. This would demonstrate that Pakistan is the kind of country where you can do large, complex infrastructure projects," he added.

At the end of last week, President Asif Ali Zardari met a team from the Asian Development Bank "to start the process of financing Daimer Bhasha dam as the project has been approved at all internal fora of the country," according to a statement from his office.

India is likely to object to the US support, as the dam is located in the disputed Kashmir region.